Taxpayers involved with cash intensive industries, like cannabis, need to be aware of additional filing requirements with the Internal Revenue Service (“IRS”) and the Financial Crimes Enforcement Network (“FinCEN”) when receiving cash.  Those who fail to comply face stiff penalties.

Form 8300, Report of Cash Payments Over $10,000 in a Trade or Business is required to be filed by  each person (individual, company, corporation, partnership, association, trust or estate) engaged in a trade or business, who in the course of that trade or business receives more than $10,000 in cash in one transaction or in two or more related transactions.

When to File Form 8300: By the 15th day after the date the cash was received. If received on a weekend or legal holiday, the form is due on the next business day.

Form 8300 must be electronically filed using the FinCEN Bank Secrecy Act (BAS) E-filing system at https://bsaefiling.fincen.treas.gov/main.html

Definition of Cash: Cash is defined as U.S. and foreign coin and currency received in any transaction, cashier’s check, money order, bank draft, or travelers check.  Note, cash does not include a check drawn on the payer’s own account, such as a personal check regardless of the amount.

Must Provide Written Notice: Each person named on a required Form 8300 must be given a written or electronic statement on or before January 31 of the year following the calendar year in which the cash was received.  The statement must include the name, phone number and address of the contact for the business, the aggregate amount of reportable cash received, and notification that the information was furnished to the IRS.  Senders and recipients should maintain  a copy in their  records for at least 5 years.

Penalties: If you fail to file a complete Form 8300 on time and you cannot show the failure was due to reasonable cause, you may be subject to penalties.  You may also be subject to penalties if you fail to furnish a statement to each person named in a required report.  The minimum penalty of $25,000 may be imposed if the failure to file is due to an intentional or willful disregard of the cash reporting requirements.

Further detailed instructions can be found here:

https://www.irs.gov/businesses/small-businesses-self-employed/irs-form-8300-reference-guide

Should you have any questions regarding Form 8300 filings and reporting, please contact our team to discuss your specific situation.

 

Aura Advisors, an Accountancy Corporation is a boutique tax consulting, compliance, and representation firm working with affluent individuals and owners/officers/founders of start-up/emerging growth companies. Building connections beyond the code.